Advanced Search
MyIDEAS: Login to save this article or follow this journal

Saving Your Home in Chapter 13 Bankruptcy

Contents:

Author Info

  • Michelle J. White
  • Ning Zhu
Registered author(s):

    Abstract

    This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed homeowners. We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy and evaluate it using a new data set of debtors who filed for bankruptcy under Chapter 13 in 2006. We also examine the effect of introducing cram down of residential mortgages in Chapter 13, which would reduce the total amount that debtors owe. We find that 96 percent of Chapter 13 filers are homeowners and 79 percent of filers repay mortgage debt in their repayment plans, while just 9 percent of filers replay only unsecured debt in their plans. Thus, filers use Chapter 13 almost exclusively as a save-your-home procedure. Under current law, only about 1 percent of Chapter 13 filers who would otherwise have defaulted save their homes, but this fraction would increase to 10 percent if cram down were introduced. We estimate that the cost to lenders of cram down would be $264,000 per home saved and $30 billion in total. (c) 2010 by The University of Chicago. All rights reserved..

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/605096
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by University of Chicago Press in its journal The Journal of Legal Studies.

    Volume (Year): 39 (2010)
    Issue (Month): 1 (01)
    Pages: 33-61

    as in new window
    Handle: RePEc:ucp:jlstud:v:39:y:2010:i:1:p:33-61

    Contact details of provider:
    Web page: http://www.journals.uchicago.edu/JLS/

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Chintal Desai & Gregory Elliehausen & Jevgenijs Steinbuks, 2013. "Effects of Bankruptcy Exemptions and Foreclosure Laws on Mortgage Default and Foreclosure Rates," The Journal of Real Estate Finance and Economics, Springer, vol. 47(3), pages 391-415, October.
    2. Wenli Li & Ishani Tewari & Michelle White, 2014. "Using Bankruptcy to Reduce Foreclosures: Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?," CESifo Working Paper Series 4722, CESifo Group Munich.
    3. Wenli Li & Ishani Tewari & Michelle J. White, 2014. "Using Bankruptcy to Reduce Foreclosures: Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?," NBER Working Papers 19952, National Bureau of Economic Research, Inc.
    4. Wenli Li & Michelle J. White & Ning Zhu, 2011. "Did Bankruptcy Reform Cause Mortgage Defaults to Rise?," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 123-47, November.
    5. Wenli Li & Michelle J. White, 2009. "Mortgage Default, Foreclosure, and Bankruptcy," NBER Working Papers 15472, National Bureau of Economic Research, Inc.
    6. Michelle White & Wenli Li, 2011. "Residential Mortgage Default and Consumer Bankruptcy: Theory and Empirical Evidence," 2011 Meeting Papers 1038, Society for Economic Dynamics.
    7. Wenli Li & Michelle J. White & Ning Zhu, 2010. "Did Bankruptcy Reform Cause Mortgage Default to Rise?," NBER Working Papers 15968, National Bureau of Economic Research, Inc.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:39:y:2010:i:1:p:33-61. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.